President Trump plans to announce new reciprocal tariffs on April 2nd. This is aimed at reducing the US trade deficit of $1.2 trillion. He calls this the "Liberation Day" for the US economy.
Since Trump's previous tariffs had a significant impact on the crypto market and triggered liquidations, the decision on April 2nd could also have a notable market impact.
Trump's Liberation Day Tariff Plan, What's New?
Trump may delay the most aggressive sector-specific tariffs. This could include automobiles, semiconductors, and pharmaceutical industries.
The US may focus only on countries with the largest trade surpluses and those with the highest barriers to US goods. These are informally called the "Dirty 15" and consist of 10-15 countries.
However, the decision is not yet confirmed. Trump can still change direction, as he has done in previous announcements.
"We can benefit many countries, but it's reciprocal. But we can be even kinder. We have been very kind to many countries for a long time. But I call this the Liberation Day. April 2nd is Liberation Day," the US President announced.
Delaying or reducing the scope of tariffs could alleviate pressure on stock and crypto markets.
As we've recently seen, when tariffs appear aggressive, the market often declines. When tariffs are more cautious or delayed, prices often stabilize or rebound.
Trump Tariff Plan... Crypto Market Scenarios
The April 2nd tariff announcement could impact the crypto market. It depends on how aggressive or targeted the final policy is. Here's an analysis of how crypto prices might move.
If Tariffs Are Aggressive (Broad, High Rates)
- Risk Sentiment Decline: Stock and bond markets will react negatively to aggressive tariffs on automobiles, semiconductors, and pharmaceuticals. This could extend to cryptocurrencies, which are still treated as risk assets.
- Bitcoin and Ethereum could fall, as traders prepare for global growth slowdown and increased inflation risks.
- Capital movement to dollars or cash could trigger short-term outflows from speculative assets like altcoins.
For example, when Trump reaffirmed high tariffs in February, Bitcoin dropped below $90,000. Amid broader market unease. The same pattern could repeat.
If Tariffs Are Reduced (Delayed or Selectively Targeted)
- Market Relief Rally: If the Trump administration confirms delaying auto/semiconductor/pharma tariffs and targeting only countries with high trade barriers, investor anxiety could ease.
- This could promote a short-term recovery in crypto prices, especially if the stock market also rebounds.
- Increased clarity reduces volatility, and markets tend to reward this, including cryptocurrencies.
For instance, when Trump hinted at flexibility earlier this month, Bitcoin rebounded to around $88,000. Narrower tariffs could trigger a similar rise.
Overall, the crypto market is highly sensitive to recent macroeconomic signals. Tariffs trigger fears of global trade slowdown and inflation increases.
All of this affects investor risk appetite. While cryptocurrencies are not directly linked to trade flows, they are deeply intertwined with broader liquidity conditions and investor sentiment.
